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Category: Foreclosure

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Two O.C. loan officers indicted in Las Vegas foreclosures case

Nevada foreclosure

In what appear to be the first criminal charges to stem from the fracas over improper foreclosures last year, two Southern California title loan officers have been indicted by a Nevada grand jury for allegedly filing tens of thousands of improper documents related to Las Vegas-area foreclosures.

The Clark County grand jury charged Gary Trafford, 49, of Irvine and Geraldine Sheppard, 62, of Santa Ana on 606 counts, alleging that the two headed up a vast “robo-signing” operation that resulted in the filing of tens of thousands of fraudulent foreclosure documents.

The documents were filed with the Clark County recorder’s office between 2005 and 2008, according to the indictment. The two title loan officers worked for the firm Lender Processing Services, a foreclosure processing company based in Florida that has been used by most of the largest banks in the nation to process home repossessions.

"I am not allowed to speak with you. I have no comment at this time," Sheppard said when reached by phone. Trafford could not be reached for comment.

The two have not been arrested, a spokeswoman for Nevada Atty. Gen. Catherine Cortez Masto told The Associated Press. LPS said in a statement that it is working with the authorities.

The company, in its statement, acknowledged that some of its documents were flawed but said the documents did not result in wrongful foreclosures.

“I am deeply committed to ensuring that LPS meets rigorous standards of professional conduct and operating excellence,” LPS Chief Executive Hugh Harris said in the statement. “I have full confidence in the ability of our leadership team and over 8,000 dedicated employees to deliver on that commitment."

Trafford is charged with 102 counts of offering false instruments for recording, a felony; false certification on certain instrument, a felony; and notarization of the signature of a person not in the presence of a notary public, a misdemeanor.

Sheppard is charged with 100 counts of offering false instruments for recording, a felony; false certification on certain instruments, a felony; and notarization of the signature of a person not in the presence of a notary public, a misdemeanor.

The indictment says that two title loan officers directed the fraudulent notarization and filing of paperwork used to initiate foreclosure on homeowners in the Las Vegas area. Nevada alleges that the two directed their employees to forge foreclosure documents, notarize the signatures on the documents they had forged and then file the fraudulent paperwork with the Clark County recorder's office in order to begin foreclosures on homes throughout the county.


Banks' foreclosure activity picks up

Victims of improper foreclosure practices can submit claims

Many Americans say they will have to work until they're 80

-- Alejandro Lazo

Photo: A foreclosure sign in front of a bank-owned home for sale in Las Vegas. Credit: Robyn Beck / AFP/Getty Images

Study: In some areas, risky loans punished the rich more than the poor


Five years into the housing bust, are rich or poor homeowners more likely to suffer foreclosure?

It all depends on which part of the country you're in, according to a Center for Responsible Lending study.

Low- and moderate-income borrowers have been most affected in cities such as Detroit, Cleveland and St. Louis, where weak economies meant home prices didn't rise much even while much of the nation was caught up in the housing bubble, the nonprofit CRL said.

However, in areas that had strong housing appreciation before the collapse, such as California and Nevada, the opposite is true. In these areas, middle- and higher-income borrowers have been most likely to fall into foreclosure, according to CRL's study of 27 million mortgages over five years.

The explanation, CRL said Thursday, is that higher-income borrowers in expensive boom states wound up with a disproportionate number of high-risk loans, as did the lower-income residents of cities with weak economies and housing markets.

The rich borrowers were stretching to buy homes by using supposedly prime adjustable-rate loans requiring interest-only payments at first, or pay-option mortgages that allowed them to pay so little that their loan balance rose instead of fell. 

Continue reading »

Fewer home loans going bad but foreclosures on rise

Far fewer borrowers are delinquent on their home loans these days, a Mortgage Bankers Assn. report shows, but new foreclosure actions are on the rise in states like California, showing the nation still has much pain to endure before the housing crisis subsides.

Private analysts say the nation is only halfway through the wrenching grip of the foreclosure epidemic. And that's reflected in the housing market, where home sales and prices continue to sag in many areas despite record low interest rates.

Five years into the crisis, 7.99% of all U.S. home loans were behind by at least one payment in the third quarter but not yet in foreclosure, the mortgage trade group said Thursday. That's down by nearly half a percentage point from the second quarter and more than a percentage point from a year earlier.

But the group's statistics showed how banks are reasserting themselves against troubled borrowers after slowing the process for nearly a year amid increased scrutiny from regulators.

The percentage of loans on which foreclosure actions were started during the third quarter was 1.08%, up from 0.96% in the second quarter. California had the nation's fifth-highest rate of new foreclosures: nearly 1.5% in the latest quarter.

The percentage of somewhere in the foreclosure process at the end of the third quarter was 4.43%, up slightly from a year earlier. The rate of homes in foreclosure was highest in Eastern and Midwestern states that route all home repossessions through the courts, with Florida at more than 14% and New Jersey at 8%.

California, which for years had one of the highest rates of loans in foreclosure, has fallen to 19th on the list because its foreclosure process doesn't normally require court action and is among the most streamlined in the nation. In other words, even as the rate of new foreclosures increases, the repossessions are being handled quickly.

Of states that handle foreclosures without going through court procedures, Nevada was the only one high on the total foreclosure-rate list, with nearly 8% of its mortgages in foreclosure.  

In a separate report Thursday, mortgage finance giant Freddie Mac said the typical rate on a 30-year fixed-rate home loan early this week was an even 4.0%, a statistically insignificant rise from 3.99% a week earlier. The 15-year fixed loan rates rose to 3.31% from 3.30%.

Expressing some optimism, Frank Nothaft, an economist for the trade group, said the economy "is showing potential for further gains in the near term" as the near-record low mortgage rates persist.

Retail sales rose for the fifth straight month in October, consumer confidence rose for the third straight month in early November to the highest reading since June, and home-builder confidence exhibited a back-to-back monthly increase in November to the strongest level since May 2010, Nothaft said, citing various surveys.


Banks' foreclosure activity picks up

Victims of improper foreclosure practices can submit claims

Many Americans say they will have to work until they're 80

-- E. Scott Reckard

Photo: San Jose protesters target Bank of America. Credit: Paul Sakuma / Associated Press

Federal Housing Administration could require bailout, audit finds

A new report said there is close to a 50% chance the Federal Housing Administration could need a bailout
There is a nearly 50% chance that the Federal Housing Administration will require a taxpayer bailout as the struggling housing market continues to eat away at the cash reserves of the agency, which insured about one in seven residential mortgages issued this year, according to a government audit released Tuesday.

The reserves, which are not supposed to be below 2% of projected losses, continued to fall this year, dropping to 0.24% from the already seriously low level of 0.5% last year, the report said. The drop was caused by the FHA's cash reserves falling by $2.1 billion, to just $2.6 billion.

But under the report's baseline projection for housing prices, which assumes they will drop 5.6% in 2011 before rebounding next year to 1.3% growth, the FHA would not need a bailout, the report said. In fact, the reserve fund would return to its mandated 2% level by 2014, slightly earlier than projected last year.

"It would take very significant declines in home prices in 2012 to create a situation in which the current portfolio would require any kind of additional support," said acting FHA Commissioner Carol Galante. She said the agency's reserve fund continues to be "actuarially sound."

But the report by an independent actuary found that if home prices continue to decline next year, the FHA probably would need a bailout. The size of the bailout would depend on how much housing prices drop.

If the FHA needs taxpayer money to keep it afloat, it does not have to seek approval from Congress or the White House. The agency has existing authority to tap the U.S. Treasury for funds.

The FHA, which was created during the Great Depression to help revive a devastated housing market, has never required taxpayer assistance. It has been playing a major role in the housing market since the subprime housing bubble burst, and most of the losses come from loans it guaranteed that were made before early 2009.

With its reserves dwindling because of losses on insurance for those loans, the FHA took steps in late 2009 to improve its finances. Those steps included requiring higher premiums and better credit scores from borrowers. Those moves have helped buffer the agency against the continued slide in housing prices, and the high average credit score of 700 for borrowers whose loans were insured this year set a record for the FHA, Galante said.


U.S. to lower the size of mortgage it will guarantee

Obama administration boosts aid for unemployed homeowners

FHA may be setting up repeat of housing bubble, lawmakers worry

-- Jim Puzzanghera in Washington

Photo: A house for sale in Glendale in September. Credit: Getty Images

Falling prices mean rising affordability, California Realtors say


Call it the silver lining of falling home prices.

With low interest rates and cheaper housing throughout the Golden State, the percentage of homebuyers who could afford to purchase a home increased in the third quarter, a real estate group said Thursday.

The number of households who could afford a home priced at the statewide median of $292,120 rose in the third quarter, according to an index produced by the California Assn. of Realtors. Fifty-two percent of California households could afford that price, compared to 51% in the second quarter.

Now if these households would only buy.

Beth L. Peerce, president of the group, said in the news release that one problem potential homebuyers could face is tight credit. Many first-time buyers don’t qualify for a loan, she said. Indeed, some analysts have noted that banks have tightened their loan criteria since the housing crash. But it was those loose lending standards that caused the real estate bubble in the first place, so many other analysts also argue that more carefully scrutinizing borrowers is appropriate.

The federal government has been providing enormous support to the mortgage market through loans backed by the Federal Housing Administration, though it has recently taken steps to scale back that support.

In California, potential buyers needed to earn at least $61,530 a year per household to qualify for the median-priced home. The median is the point at which half the homes in the state sold for more and half for less.

The real estate group calculated the monthly payment for a mortgage on such a home to be $1,540, including taxes and insurance, and assuming a 20% down payment and a 4.63% effective composite interest rate.


California bows out of probe of mortgage lenders

Kamala Harris a key player in settlement over mortgage crisis

Kamala Harris explains decision to exit mortgage settlement talks

-- Alejandro Lazo

Photo: A home on the market in Altadena features a sign of the times. Credit: Associated Press


Consumer Confidential: Foreclosure rate up, Amazon's best books

Here's your take-me-to-the-river Tuesday roundup of consumer news from around the Web:

--Lawmakers continue to dither over what to do about rising foreclosure rates. Meanwhile, the foreclosure rate has risen again. The rate at which mortgage holders were late with their payments by 60 days or more rose in the June-to-September period for the first time since the last three months of 2009, according to TransUnion. The credit reporting agency said 5.88% of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82% in the second quarter. The increase surprised TransUnion researchers, who had expected late payments, or delinquencies, to fall for the quarter.

--Talk about a field of dreams: A debut novel, Chad Harbach's "The Art of Fielding," has been chosen's best book of 2011. The online retailer's Top 10 list also features Walter Isaacson's biography of Steve Jobs and two of the year's most talked-about works of fiction, Jeffrey Eugenides' "The Marriage Plot" and Haruki Marukami's "1Q84." Amazon's editorial picks include the memoir "What It is Like to Go to War," by Karl Marlantes; and two nonfiction books set during World War II, Erik Larsen's "In the Garden of Beasts" and Michael Zuckoff's "Lost in Shangri-La." Others selected were a second debut novel, Tea Obreht's "The Tiger's Wife"; the literary thriller "Before I Go to Sleep," by S.J. Watson; and a young adult novel, Laini Taylor's "Daughter of Smoke and Bone."

-- David Lazarus

 Photo: Joe Raedle / Getty Images

Banks, regulators start massive review of foreclosures


Some people who lost their homes to a foreclosure system wrought with error and misconduct may now request their cases be independently reviewed and potentially may be compensated.

A large-scale review of foreclosures that occurred in 2009 and 2010 began on Tuesday with federal regulators requiring the nation’s largest mortgage servicers to start mailing letters to potential victims. Independent consultants that the banks were ordered to hire in April will conduct the assessments. More than 4 million borrowers could be eligible.

“The independent foreclosure review is a significant component of the mortgage servicers’ compliance with our enforcement actions,” said John Walsh, acting Comptroller of the Currency, who along with the Federal Reserve and Office of Thrift Supervision ordered the reviews. “These requirements help ensure that the servicers provide appropriate compensation to borrowers who suffered financial harm as a result of improper practices identified in our enforcement actions.”

The actions affect 14 large mortgage servicers that were required to correct the shortcomings and errors in their foreclosure processes. The outreach effort that began Tuesday is a first step.

Each mortgage servicer is required to mail one letter to each customer who is eligible for the review. An advertising campaign will also begin shortly to get the word out to people potentially harmed by the errors, federal officials and bank representatives said Tuesday.

A financial compensation schema for borrowers found to have been foreclosed on improperly has not been developed yet, and neither banking officials nor regulators gave an estimate for how much the actions would cost the banks.

The actions by the federal regulators come after it was revealed last year that banks employed so-called robo-signers, people who signed foreclosure documents en masse without properly reviewing them; took back their homes even though they were being reviewed for a loan modification; and made other errors in the foreclosure and servicing processes.

The enforcement orders are separate from work being done by a committee of attorneys general that also hope to reach a settlement with the nation’s largest banks over faulty foreclosure practices. Those negotiations remain ongoing, even though some states have voiced concern over the direction of the negotiations, and California has dropped out altogether.

A website for borrowers who want to learn more about the federal claims process has been created,, as has a toll-free phone line, (888) 952-9105.


California bows out of probe of mortgage lenders

Kamala Harris a key player in settlement over mortgage crisis

Kamala Harris explains decision to exit mortgage settlement talks

-- Alejandro Lazo

Photo: A foreclosure notice hangs in the window of a home on Sand Pine Trail in the gated Willow Walk community in Hemet. Credit: Gina Ferazzi / Los Angeles Times


California state housing agency reverses on foreclosures

Foreclosureglendalesept11getty kevork djansezian

A state-run housing agency at least temporarily has suspended the practice of foreclosing on a small number of borrowers who rented out their homes.

The office of Senate President Pro Tem Darrell Steinberg (D-Sacramento) on Friday announced that the California Housing Finance Agency had agreed to his request to halt the foreclosures, even though the homeowners had not fallen behind on their monthly payments.

Earlier this week, Senate investigators issued a report that said the agency, known as CalHFA, initiated or threatened foreclosures on about 200 borrowers because they were no longer living in the homes as required by state regulations and interpretations of federal tax law.

The borrowers, who owed more on their properties than their market values, moved out for a variety of personal reasons but did not want to sell the homes at losses.

"The agency is making the right decision during difficult economic times," said Steinberg. "Struggling families, who are working to do the right thing in meeting their obligations, shouldn't be saddled with an extra, unnecessary burden."

The agency said it finances $4.2-billion worth of low-interest mortgages through the sale of tax-free bonds. U.S. Internal Revenue Service Rules specifically prohibit that the money from the sale of bonds be lent to home buyers who do not live in the properties.

Nevertheless, the agency in a letter to Steinberg and Senate Housing Committee Chairman Mark DeSaulnier (D-Concord) said it asked its board of directors to revisit the issue of owner-occupancy at its January board meeting. In the meantime, it is temporarily ceasing foreclosure proceedings  against "those who may be renting out their residence while staying current on their payments."

DeSaulnier said he is asking the agency to make the change permanent. "CalHFA serves predominately low-income, first-time home buyers," he said. These Californians should not fear foreclosure when they are doing everything right."


A realistic fix for mortgage crisis 

Obama's housing rescue plan: Up from underwater

State agency foreclosing on borrowers who rent out their homes

-- Marc Lifsher

Photo: A foreclosed Glendale home in September. Credit: Kevork Djansezian / Getty Images

Obama administration touts refinancing program as economic boost

Housing and Urban Development Secretary Shaun DonovanObama administration officials touted an overhaul of a program to allow more underwater homeowners to refinance as a boost to the broader economy, although they were unable to project how many people the initiative would help.

"Today’s announcement is a very significant step in moving more families who have met their responsibilities into a position to refinance at significant savings," Gene Sperling, the top White House economic adviser, told reporters Monday.

Sperling and Housing and Urban Development Secretary Shaun Donovan noted that with mortgage interest rates at record lows, a homeowner can save an average of about $2,500 a year by refinancing. The additional money in the hands of a consumer would help stimulate the economy, which in turn would help stabilize the housing market.

"It's the equivalent of a substantial tax cut for these families," Donovan said.

The independent Federal Housing Finance Agency on Monday announced major changes to the administration's 2½-year-old Home Affordable Refinancing Program, which has helped 894,000 homeowners refinance.

The most significant change is to expand eligibility to more people who owe more on their homes than it is worth. The FHFA will remove a limit that prevented participation in the program by borrowers who owed more than 125% of the value of their homes.

Borrowers would have to be up-to-date on their mortgages, with no late payments in the previous six months and no more than one late payment in the last 12 months. Only people with loans owned by seized housing finance giants Fannie Mae and Freddie Mac are eligible, and those loans must have been sold to the firms by May 31, 2009.

The administration officials stressed that the expansion of the HARP program was only one step in dealing with the struggling real estate market, but one that could be taken without requiring the partisan-gridlocked Congress to pass legislation.

White House Communications Director Dan Pfeiffer said President Obama was trying to find ways to help the economy that do not depend on Congress, which has balked at passing his new jobs package. Administration officials are calling the push for such executive action "We can't wait."

Obama will highlight the refinancing rules during an appearance Monday in Nevada, which is one of the state's hardest hit by the foreclosure crisis, along with California and Florida.

"When Congress won't act, this president will," Pfeiffer said.

Sperling said the administration was trying to find the right combination of programs to reverse the foreclosure crisis.

"The president is committed to attacking the housing crisis on all fronts," Sperling said. "This significant effort on refinancing … is an important part of that arsenal but it’s only one part."


Home-loan refinancing to get easier

Obama administration ramps up mortgage effort 

Plan would allow refinancing of some underwater mortgages

— Jim Puzzanghera in Washington

 Photo: Housing and Urban Development Secretary Shaun Donovan. Credit: Bloomberg

Scam watch: Facebook lottery, unclaimed money, foreclosure rescue

ZuckerbergphotoHere is a roundup of alleged cons, frauds and schemes to watch out for.

Facebook lottery - Mark Zuckerberg, Facebook Inc.'s founder and chief executive, is a savvy businessman. As much as you may want to believe it, he's not going to just hand you $1 million. The Better Business Bureau is warning consumers to delete emails that say they've won $1 million in "our 2011 Sweepstakes (Facebook Inc).” The emails are not from Facebook and recipients should not click on links in the email to claim the "prize." The links will likely install malware –- harmful or malicious programs -– on the recipient’s computer, the BBB said. Or they'll lead to an email reply from a scammer asking to be paid in advance to cover taxes or fees on the nonexistent prize.

Unclaimed property - The Better Business Bureau is warning about another email offer that sounds too good to be true -- and probably is. The emails advise recipients that they have "millions of dollars" of unclaimed money available to them, if they call an overseas telephone number. Anyone who calls the number will end up on the line with a scammer who wants to get personal information such as bank account, credit card and Social Security numbers, the group said. If you receive an email claiming you have unclaimed property, chances are it is a scam. The best option is to delete it. Many states do hold unclaimed money from long-ignored bank accounts, returned tax refunds and other places. But they do not send out emails advertising this. Instead, many states have websites that consumers can search for unclaimed money.

Foreclosure rescue - Many financial scams target people in distress. Federal prosecutors in Arizona say a Phoenix man duped at least 1,800 people into paying him for a bogus offer to help people avoid foreclosure. Luis Belevan, 34, pleaded guilty this month to charges related to the scheme. Prosecutors said he had told people about to lose their homes that he could buy their homes and offer restructured loans at much lower monthly payments. Homeowners paid $1,595 up front, but got nothing in return, according to prosecutors. As part of a plea agreement, Belevan, who has agreed to pay more than $2 million to victims, faces a maximum sentence of five years in federal prison.


Scam watch: Child identity theft, credit repair, investments

Scam Watch: Investments, seniors, credit cards

Scam Watch: Cars and investment fraud

-- Stuart Pfeifer

Photo: Mark Zuckerberg, Facebook Inc.'s founder and chief executive. Credit: Bloomberg

Number of Californians entering foreclosure jumps in third quarter

A big August surge in foreclosure actions by Bank of America and Bank of New York sent the number of California homeowners entering foreclosure to levels not seen in a year.

The third-quarter jump in notices of default, the first formal step in the foreclosure process, came after such filings had dropped to a three-year low earlier this year. Defaults were up 25.9% from the prior quarter, according to according to San Diego-based DataQuick, a real estate information service.

Banks have fired up the foreclosure-processing machinery in recent months after a long lull as they tried to negotiate settlements with regulators over faulty foreclosure practices. That slowdown created a backlog after a slew of investigations were launched following last year’s so-called robo-signing scandal, where banks used improper practices and documents to foreclose on troubled homeowners.

“Obviously, some lenders and loan servicers have begun to plow through their backlogs of delinquent loans more aggressively,” DataQuick president John Walsh said in a statement.

California properties received an estimated 71,275 notices of default during the three months ended Sept. 30, with some properties receiving multiple notices due to more than one loan. The majority of those loans were from the peak bubble years of 2005, 2006 and 2007, when lending practices were at their loosest, DataQuick said.

Separate third-quarter data released earlier this month by the Irvine-based firm RealtyTrac showed the number of homes entering foreclosure surged in states where repossessions take place largely outside of the courtroom. These nonjudicial states include California, Nevada, Arizona, Oregon and Washington.

Experts said that these Western states would experience any foreclosure surge first, as it is easier to get the process rolling again in these places.

While more California homes entered the foreclosure process in the third quarter, the number of homes taken back by banks continued to decline, according to DataQuick. The number of filed trustees deeds -- which are the papers that record the repossession of a home -- declined 8.4% from the prior quarter and dropped 14.3% from the third quarter of 2010. A total of 38,895 trustees deeds were filed in the third quarter.

Experts said that banks are probably waiting for some kind of settlement to be hammered out before really picking up the pace on foreclosures again. The increase in new California proceedings comes as talks over a broad foreclosure settlement by state attorneys general with the nation's five-largest mortgage servicers have experienced setbacks -- dragging on far longer than expected.

California recently stepped out of those discussions, declaring it would pursue its own path.


California bows out of probe of mortgage lenders

Kamala Harris a key player in settlement over mortgage crisis

Kamala Harris explains decision to exit mortgage settlement talks

-- Alejandro Lazo

Photo: A foreclosure notice hangs in the window of a home on Sand Pine Trail in the gated Willow Walk community in Hemet. Credit: Gina Ferazzi / The Los Angeles Times


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